Royal Insurance Company, Limited v. Simon

• Decision Date: 25 July 1934
• Parties: ROYAL INSURANCE COMPANY, LIMITED, a corporation of the United Kingdom of Great Britain, v. LOUIS SIMON, SWIFT & COMPANY, an Illinois corporation, MORRIS SHANIS, CHARLES Y. FOX, ELI E. DAVIS and WILLIAM A. LINDSEY, trading as Githens, Remsamer and Company, INDUSTRIAL TRUST COMPANY, a Delaware corporation, SECURITY TRUST COMPANY, a Delaware corporation, WORKINGMEN'S SELF HELP ASSOCIATION, INC., a Delaware corporation, KRAMEDAS-HUDSON CO., INC., a Delaware corporation, CIROALO-VASSALLO AND KRAMEDAS, INC., a Delaware corporation, WILMINGTON PROVISION COMPANY, a Delaware corporation, PRICE ADJUSTMENT BUREAU and PERCY WARREN GREEN
• Court: Court of Chancery of Delaware

174 A. 444

20 Del.Ch. 297

ROYAL INSURANCE COMPANY, LIMITED, a corporation of the United Kingdom of Great Britain, v. LOUIS SIMON, SWIFT & COMPANY, an Illinois corporation, MORRIS SHANIS, CHARLES Y. FOX, ELI E. DAVIS and WILLIAM A. LINDSEY, trading as Githens, Remsamer and Company, INDUSTRIAL TRUST COMPANY, a Delaware corporation, SECURITY TRUST COMPANY, a Delaware corporation, WORKINGMEN'S SELF HELP ASSOCIATION, INC., a Delaware corporation, KRAMEDAS-HUDSON CO., INC., a Delaware corporation, CIROALO-VASSALLO AND KRAMEDAS, INC., a Delaware corporation, WILMINGTON PROVISION COMPANY, a Delaware corporation, PRICE ADJUSTMENT BUREAU and PERCY WARREN GREEN

Court of Chancery of Delaware, New Castle

July 25, 1934

BILL OF INTERPLEADER. On December 20, 1932, the defendant, Simon secured judgment in the Superior Court, New Castle County for $ 3,263.77 besides costs of suit. The other defendants for one reason or other asserted rights in said judgment and made demand on the complainant that it pay them the sums claimed to be payable to them respectively in consequence of their respective rights as asserted. The sum due on the judgment, being the full amount thereof, is not large enough to cover all of the claims asserted against it. The complainant, in view of the insufficiency of the amount owed by it to pay all the demands and because of the conflicting nature of the claims made against it and its doubts as to the rights of the respective parties, filed the pending bill which calls upon the respective claimants to interplead one with another. The complainant has paid the sum due on the judgment into the registry of this court, subject to distribution as the court should decree. All of the defendants, except Kramedas-Hudson Co., Inc., as to which the bill has been taken pro confesso, have answered and asserted their respective claims. The facts are not in controversy. The questions are solely questions of law. The Chancellor's opinion sets forth the nature of the rights asserted by the respective parties in so far as is necessary for a determination of the cause.

Charles F. Curley, for complainant.

H Albert Young, for Louis Simon.

Josiah Marvel, Jr., of the firm of Marvel, Morford, Ward & Logan for Swift & Co.

Leslie H. Gluckman and Herman Cohen, for Morris Shanis.

Leonard G. Hagner, for Charles Y. Fox and others, trading as Githens, Remsamer & Co.

John B. Jester, for Industrial Trust Co.

James M. Malloy, for Security Trust Co.

H. Albert Young, for Workingmen's Self Help Association, Inc.

Elwood F. Melson, for Ciroalo-Vassallo & Kramedas, Inc.

Edmund S. Hellings, for Wilmington Provision Co.

Harry Rubenstein, for Price Adjustment Bureau.

Percy Warren Green, in propria persona.

OPINION

THE CHANCELLOR:

This case presents the demands of rival claimants to have their respective claims paid out of a judgment which Simon recovered against the complainant for loss suffered by him under fire insurance contracts.

1. One of the claimants is Percy Warren Green who acted as attorney for Simon and conducted the suit which eventuated in the judgment. He contends that he is entitled to a lien ahead of other claiming defendants whose rights are based on execution attachments laid by them as the judgment creditors of Simon in the hands of the insurance company, his debtor. Green undertook to protect his lien by having the judgment marked to his use. His contention presents the question of whether an attorney is entitled to a lien upon a judgment recovered by him for professional services rendered by him in prosecuting the claim on which the judgment was obtained.

There is no statute in the state governing the subject. Liens of attorneys are of two sorts--retaining liens and charging liens. A retaining lien is the right of an attorney to retain possession of documents, money or other property in his possession belonging to his client which he acquired in the course of his professional relationship, until he is paid the full amount due from the client for professional services rendered. Green does not claim to possess a lien of that kind. He claims a charging lien. A charging lien is defined as "the right of an attorney at law to recover compensation for his services from a fund recovered by his aid, and also the right to be protected by the court to the end that such recovery might be effected." 2 Thornton, Attorneys at Law, § 578.

In many of the states charging liens are recognized by statute. Where there is no statute, however, as in Delaware, the authorities accord recognition to their existence. The cases are cited in 2 Thornton, Attorneys at Law, § 579; 6 C. J., p. 766, § 364; 2 R. C. L. 1069, § 160. The theory upon which the so-called lien rests is variously stated. In some cases it is placed on the equity of an attorney to be paid his fees and expenses out of the judgment in the securing and therefore creation of which he had contributed of his services, skill and, in case of disbursements, of his money. Coughlin v. N. Y. Cent. & H. R. R., 71 N.Y. 443, 27 Am. Rep. 75. His claim is analogized in principle to that of a mechanic or artisan who is given a lien against the structure or the chattels to the erection, making or repair of which his labor and skill have been contributed (Coughlin v. N. Y. Central & H. R. R. Co., supra; Weed Sewing Machine Co. v. Boutelle, 56 Vt. 570, 48 Am. Rep. 821), though of course in the case of the mechanic's lien the principle derives its sanction from statutory enactment. The Maine courts have placed an attorney's charging lien upon the theory that there has been the equivalent of an assignment as collateral security for his fees and disbursements. Hobson v. Watson, 34 Me. 20, 56 Am. Dec. 632; Newbert v. Cunningham, 50 Me. 231, 79 Am. Dec. 612. Let the theory be as it may, the rule aside from statute appears to be established by the prepondering weight of the authorities that an attorney is entitled to assert and enforce what is commonly described as his charging lien; and the prevalence of so many statutes in which the lien is recognized and its enforcement regulated is rather strong and convincing evidence of the justice and equity which underlie it.

Green's retainer by Simon was on a contingent basis. On the brief filed by the solicitor for the Industrial Trust Company it is stated that a charging lien is allowed only for services rendered and not for a share of the recovery stipulated for in the contract of retainer. Kauffman v. Phillips, 154 Iowa 542, 134 N.W. 575, and Gibson v. Chicago, etc., Railroad Co., 122 Iowa 565, 98 N.W. 474, are cited in support of that statement. If by the statement, it is meant that an attorney cannot contract to be paid his fee out of the recovery obtained in the suit conducted by him, the cases cited do not support it; and Bayard v. McLain, 3 Harr. 139, decided by the old Court of Errors and Appeals of this State refutes it. The statement on the brief of the solicitor for the Industrial Trust Company is evidently quoted from 6 C. J., p. 770, § 368. It has no pertinency to the instant case as a reading of the two Iowa cases cited in support of the Corpus Juris text will disclose. Those were cases where the attorney was employed on a contingent basis and was dismissed from his employment before rendering the services. In the instant case the attorney rendered the services to the full and secured the judgment.

If the question here were between Green and his client, Simon, the former's claim to a charging lien would prevail. It prevails with equal effectiveness as against Simon's attaching creditors. Weed Sewing Machine Co. v. Boutelle, supra; Hutchinson v. Howard, 15 Vt. 544.

The conclusion on this branch of the case is that as against the attaching creditors Green has the first claim on the fund which the complainant has paid into court.

2. Another claimant is Harry I. Price, trading as Price Adjustment Bureau. The fund is large enough to pay both Green and Price. Their relative rights need therefore not be considered. Price, like Green, stands in opposition only to attaching creditors.

The claim of Price rests on a written assignment made by Simon to him of so much of any moneys which Simon might recover from the insurance company as would be necessary to repay to Price the total of advancements of cash which he would make to Simon together with out of pocket expenses incurred by Price in the course of endeavoring to adjust Simon's claim and compensation to Price for rendering assistance and advice as an expert in prosecuting insurance claims--said compensation to be ten per cent. of any recovery.

On the faith of the assignment, Price advanced to Simon two hundred and fifty dollars in cash, and incurred expenses in the amount of $ 67.50. He also rendered the services agreed to be rendered by him in connection with the prosecution of the suit which eventuated in the judgment. Having paid the stipulated consideration, he is, therefore, an equitable assignee to the extent of his claim. New Castle County National Bank v. Taylor, et al., 8 Del.Ch. 456, 68 A. 387; Bradford Co. v. United Leather Co., 11 Del.Ch. 110, 97 A. 622; Poole v. Betts, Adm'x., 18 Del.Ch. 15, 156 A. 251; Cogan v. Conover Mfg. Co., 69 N.J.Eq. 809, 64 A. 973, 115 Am. St. Rep. 629; Terney v. Wilson, 45 N.J.L. 282; Williams v. Ingersoll, 89 N.Y. 508; Colehour v. Bass, 143 Ill.App. 530; Gillett v. Hickling, 16 Ill.App. 392. Simon cannot question Price's right to be paid.

Can Simon's attaching creditors prevail over Price? It is to be noted that the attachments of the creditors (excepting three) are posterior to Price's assignment. The three that are prior are not large enough to exhaust the fund after Green and Price are paid. Therefore, Price's claim is to be considered in...